[This month’s ABCs of Immigration issue is adapted from Greg Siskind’s book, co-authored by Bruce Buchanan, The I-9 and E-Verify Handbook.]
What penalties does an employer face for Form I-9 violations?
Immigration Reform and Control Act (IIRCA) violations can lead to substantial fines and debarment from government contracts for employers. Employers who knowingly hire unauthorized employees or who commit paperwork violations are subject to penalties even if all employees are authorized to work. Depending upon the employer’s history of violations, fines for knowingly hiring unauthorized workers can range from $548 to $21,916 per employee. It is also possible for employers who knowingly hire or continue to employ unauthorized employees to be barred from competing for government contracts. Additionally, repeated hiring or employment of undocumented workers can lead to criminal prosecution.
Paperwork violations can result in hefty fines, with each I-9 with a substantive error, be it a mistake or missing item, resulting in a penalty ranging from $220 to $2,191 per form for the first offense. The penalty is determined by the percentage of I-9 errors, and though the exact amount of penalty at each level was not available at the time of this publication, an educated estimate can be found below:
- 0-9% – $220;
- 10-19% – $545;
- 20-29% – $873;
- 30-39% – $1,202;
- 40-49% – $1,530; and
- 50%+ – $1,859.
Second offenses begin at approximately $871, maxing out at $2,191 depending on the percentage of violations. For third offenses, the cost of each error is $2,191.
To put this in perspective, an employer that has 100 employees, for example, and has substantive errors on 50 Forms I-9 could face a fine of more than $100,000. Discretion with regard to the assessment of these fines lies primarily with U.S. Immigration and Customs Enforcement (ICE) investigators.
Separate from federal violations, many states have laws penalizing employers which violate their immigration laws and the Immigration reform and Control Act (IRCA), including barring such employers from state contracts and revoking their business license. Civil and criminal penalties for IRCA violations are listed below:
Hiring or continuing to employ unauthorized aliens
Fines will vary depending on past violations:
- First offense: $548 to $4,384 for each unauthorized employee.
- Second offense: $4,384 to $10,957 for each unauthorized employee.
- Subsequent offenses: $10,957 to $21,916 for each unauthorized employee.
Failing to comply with the Form I-9 requirements
The fine is $220 to $2,191 per individual employee for each substantive and uncorrected technical error, failing to properly complete, retain, or make available for inspection Forms I-9. U.S. Immigration and Customs Enforcement (ICE) will consider the following factors in mitigating or aggravating the fine by 5 percent factor:
- Business’s size.
- Employer’s good faith.
- Seriousness of the violation.
- Whether the individual was, in fact, unauthorized to work.
- History of violations by the employer.
Injunctions
In the event the U.S. Attorney General has reasonable cause to believe an employer’s engagement in a pattern of unlawful employment, recruitment, or referral activities, the Attorney General may bring a civil action in the appropriate U.S. district court requesting relief, such as temporary or permanent injunction, restraining order, or other order against an Immigration Reform and Control Act (IRCA) violator.
Criminal Penalties
Employers who have Immigration Reform and Control Act (IRCA) violations can be criminally sanctioned. Both employers and their representatives who engage in a practice or pattern of hiring or continuing to employ unauthorized employees face fines upwards of $3,000 per employee along with imprisonment of up to six months.
Indemnity Bonds
Employers requiring their employees to post a bond or indemnify the employer against IRCA violations can be fined up to $2,191 per violation and subjected to return the money to the employee.
Document Fraud
Employers who assist in the production and use of false documents for employees to use for documenting employment eligibility are subject to penalties, as is to be expected. Depending on whether it is the employer’s first offense, fines range from $452 to $9,054. For a first offense, fines and imprisonment of up to five years may be imposed, with subsequent offenses possibly resulting in 15 years imprisonment.
What are the penalties for unlawful discrimination?
IRCA
Once it has been determined that an employer has been found to have engaged in prohibited discriminated practices under the IRCA, the U.S. Department of Justice’s Immigrant and Employee Rights Section can utilize several methods of rectification. The Immigrant and Employee Rights Section has the authority to seek an order requiring an employer to:
- Hire individuals adversely affected with or without back pay (if back pay is ordered, there is a limit of two years).
- Pay the U.S. government civil penalties, possibly significant
- Post noticed to employees regarding their rights and the employer’s obligations.
- Educate all personnel involved in IRCA compliance about IRCA’s anti-discrimination rules.
- If applicable, remove a false performance review or false warning from a personnel file.
- If applicable, lift restrictions placed on an employee’s assignments, work shifts, or movements.
Document abuse carries with it a separate $181 to $1,811 monetary penalty for each individual subjected to discrimination.
Penalties for immigration-related employment discrimination range from $452 to $3,621 per individual for a first offense to $5,432 to $18,107 per individual for the third or greater offense.
Title VII
Employers who have been found to have violated Title VII of the Civil Rights Act may be ordered to fulfil one or more of the following requirements:
- Hire, reinstate, or promote with back pay and retroactive seniority the individual who was subjected to the discrimination
- Post notifications for employees with informing them of their rights and the employer’s obligations.
- Remove false or derogatory information from an employee’s personnel file.
It is also possible for financial penalties to be imposed under Title VII of the Civil Rights Act for financial losses and mental anguish in addition to punitive damages for employers who act with malice or reckless indifference.
Under either the IRCS or Title VII of the Civil Rights Acts, the prevailing party could potentially be ordered to pay attorney’s fees. Under IRCA, if the losing party’s argument does not have reasonable foundation in law and fact, then reasonable attorney’s fees may be awarded reasonable attorney’s fees. It is stated in the IRCA that the U.S. government cannot be held liable for attorney’s fees, effectively meaning that only the employer would absorb this cost. Under Title VII, however, a judge has the authority to award reasonable attorney’s fees, expert fees included, to either prevailing party, and the U.S. government can be held liable for costs just the same as the employer.
Can employers who tried in good faith to comply avoid penalties?
Yes. As long as an employer complies with the Form I-9 requirements in good faith, the employer would have a good-faith defense, even if he or she has been found to have hired an unauthorized employee. It would be the responsibility of the government to demonstrate that the employer had actual or constructive knowledge of the employee’s unlawful presence. For paperwork violations that are technical, employers may be excused if they have made a good-faith attempt at compliance. This good-faith provision is not applicable if the Department of Homeland Security (DHS) notified the employer of the issues, and the employer did not correct these issues within a span of 10 days. The good-faith provision is also not applicable to employers who have engaged in a pattern or practice of violations.
What is the process for imposing penalties?
If an ICE investigation leads to the determination that a violation of the employer sanctions rules has occurred, it may either issue a Notice of Intent to Fine (NIF) or a Warning Notice. A Warning Notice must contain a statement identifying the basis of the fine and specify which sections of the law have been violated.
In the event an NIF is issued, the notice must include the basis for the charge, the sections of the law which were violated, and the penalty which is to be imposed. Additionally, it must inform the employer of its right to counsel, of its right to a hearing before an administrative law judge (ALJ), and of the possibility that any statement made by the employer may be used against it.
If the employer wishes to challenge the fine, it must file for a hearing before an ALJ within 30 days of being served the notice. Without an appeal being filed, ICE will issue a final order 45 days from the issuance of the NIF. The employer can negotiate to lower the fine, if an appeal is filed. If an agreeable solution is not reached, the employer may litigate the matter before the ALJ.
Are entities at a company liable in addition to the one division targeted for penalties?
Once an order is issued against a specific entity in a family of distinct corporations, separate entities within the corporate family which coordinate their own hiring are not considered subject to the order.
How does U.S. Immigration and Customs Enforcement decide which cases to investigate?
U.S. Immigration and Customs Enforcement (ICE) may investigate cases on its own accord, not necessarily based on a complaint is has received. Once ICE does receive a complaint, it has the discretion to determine whether the complaint has a reasonable probability of validity and whether to investigate.
Does ICE need to provide advance notice of a Form I-9 audit?
It is a requirement that ICE provide three days’ notice before inspecting Forms I-9. The employer must make the forms available at the location which ICE requests.
In what format must Forms I-9 be provided to ICE auditors?
The original forms need to be provided for inspection, with the exception that recruiters or referrers for a fee who designate an employer to handle Form I-9 completion are allowed to present copies of the Forms I-9.
If an employer retains electronic versions of Forms-I-9, the employer needs to retrieve and reproduce the Inspecting officer specifically requests, in addition to the associated audit trails indicating who accessed the computer system and the actions performed on the system in a specific time window. The employer needs to provide the inspecting officer with the necessary hardware and software as well as access to personnel and documentation to locate, retrieve, read, and reproduces the requested Form I-9 documentation and associated audit trails, reports, and other related data.
Finally, the inspecting officer is allowed to ask for an electronic summary of all the immigration fields on an electronically stored Form I-9.
What if records are kept at a different location from where the U.S. Immigration and Customs Enforcement agents will be visiting?
If forms are stored at a different location than the worksite, the employer is required to inform the inspecting officer as to the separate location and to cooperate with the inspector by making the forms available either at the storage location or at the office of the government agency conducting the inspection.
Can an employer be penalized if it properly completed Form I-9, but the employee turns out to be unauthorized?
No. Employers that adhere to the rules of the Immigration Reform and Control Act (IRCA) will have a good-faith defense against any penalties that may be imposed for knowingly hiring an unauthorized employee. However, this is based on the assumption that the employer did not otherwise have knowledge, actual or constructive, of the employee’s lack of work authorization.
How much in fines was paid by employers in 2014 for Form I-9 violations?
In 2014, employers were assessed over $16 million in fines on 642 final orders. For reference, 2013 saw 637 final orders with penalties of more than $15.8 million. The statistics for 2015, 2016, and 2017 are currently unavailable, though ICE approximated that there were 1,200 inspections in 2016, a figure which should be similar to the 2017 total. Anecdotal evidence, however, suggests the number of inspections in 2017 to be substantially larger.
Aside from penalties under the Immigration Reform and Control Act, are there other risks associated with improperly completing Forms I-9?
Yes. There are numerous other reasons incentivizing diligent compliance with the Form I-9 requirements of the Immigration Reform and Control Act (IRCA). They include:
- Qualifying to do business with large employers that now require contractors to be in compliance.
- Qualifying for government contracts with local, state, and federal agencies that require compliance.
- Avoiding problems in a merger or acquisition where an employer’s Form I-9 records are requested as part of a due-diligence review.
- Avoiding liability under state laws that penalize employers for Form I-9 violations (including revoking business licenses and barring access to state contracts.)
- Avoiding lawsuits filed by employees who have faced immigration problems as a result of an employer’s errors (particularly when such errors might have been identified if an employer re-verified an employer’s Form I-9 and such re-verification failed to take place.
Disclaimer: This newsletter is provided as a public service and not intended to establish an attorney client relationship. Any reliance on information contained herein is taken at your own risk.